The popularity of prepaid cards has increased dramatically in recent years, as traditional banking costs and lingering distrust of large financial institutions have led folks to explore other options. At the same time that financial institutions have emphasized prepaid offerings in the face of regulations that limit the profitability of checking accounts. Prepaid card deposits nearly tripled from 2008 to 2012, according to the Mercator Advisory Group, and they are expected to rise an additional 120 percent to $168.4 billion by 2015.

Here are the results of the report, plus tips for picking the right prepaid card.
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The annual cost of prepaid card use ranges from zero to $360, emphasizing the importance of selecting the right card for your needs.
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Most, but not all, consumers will find prepaid cards to be cheaper in 2013 than in years past. The average cost of a card used as an alternative checking account is down 46 percent compared to 2012, while the cost of a card used to load a child’s allowance is down 29 percent, and cards used as replacement check cashing tools are 9 percent more expensive.
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Prepaid cards from large banks are up to 200 percent more affordable than those from smaller institutions.
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Celebrity-founded/endorsed cards are 17 to 36 percent more expensive than nonbranded prepaid cards.
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As many as 62 percent of the available prepaid card offers lack features like online bill pay and free check loading needed to meet basic consumer needs.
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Thse cards allow consumers in this scenario to avoid all fees. Additionally each offers a large number of in-network ATMs, direct deposit, and online bill pay, making it a very practical checking account alternative.

Worst alternative checking account card

While the AccountNow Visa Classic Prepaid Card does not assess a monthly fee, it does charge $2.50 per ATM withdrawal and $1 for each purchase, which makes it the most expensive alternative checking account. A consumer who is looking to escape rising checking account fees is not likely to be interested in paying roughly $30 per month for a prepaid card.
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At $4.95 and $5 respectively, the Chase Liquid Card and the PNC SmartAccess Prepaid card are without a doubt the least expensive options when used as an alternative check cashing tool. Rather than pay to cash checks and load funds via MoneyPak, Chase Liquid and PNC SmartAccess cardholders can do both for free at their respective bank branches. They can also withdraw cash for free from Chase and PNC ATMs.
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Worst card for alternative check cashing

Of the 10 cards that received scores for this scenario, the AccountNow Gold Visa Classic is the most expensive (coming in at a monthly cost of $19.95), due to high monthly and ATM withdrawal fees.
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Much like choosing the best credit card for your needs necessitates comparing offers across issuers, and product segments, the odds of finding the right prepaid card decline the more you refine your search. So, start by leaving preconceived notions at the door, compare multiple prepaid card offers, and consider whether or not other types of financial products can fulfill your particular needs at a lower cost.

Evaluate costs on actual needs and spending habits

People have a tendency to become overly focused on major fixed costs like annual and monthly service charges. Such costs are certainly important, but you also mustn’t forget that prepaid cards are known for charging many different small fees that can add up over time. As a result, it’s important to determine exactly how you plan to use your prepaid card (i.e. how you’ll load funds, the number of ATM withdrawals you’ll make, etc.) and then evaluate the cost of each offer in terms of that usage. After all, there is a wide disparity between the best offers on the market (which can be essentially free to use) and those that can end up costing you a few hundred dollars each year.
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Research bill pay, loading options, and ATM access

While cost is undoubtedly important, even a free prepaid card will be effectively useless if it doesn’t offer all of the features you need. As many as 62 percent of prepaid cards are unsuitable to consumer needs due to a lack of key features.
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Read the fine print

This advice applies to any financial product you’d apply for, but it’s especially important to verify that there aren’t any hidden fees or caveats associated with a given prepaid card because their newfound popularity means they aren’t regulated quite as well as other, more established types of products.
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Use the island approach

While the “island approach” is more commonly associated with credit card use, the idea of using different financial accounts to meet different financial needs can apply to prepaid cards as well. For example, some folks may want to get one prepaid card to use as an alternative checking account and another to monitor a child’s spending.
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